GS: Chiron Corp. EPS (FY Dec) 2005E $1.25, 2006E $1.80 In-Line/Neutral
(CHIR) $37.55
CHIR hosted a conference call on the reinstatement of its Fluvirin manufacturing
license by the MHRA (UK regulatory agency). With the suspension lifted, CHIR can
start production of Fluvirin. However, FDA inspection, capacity, pricing and margin
for Fluvirin in the 2005/06 season are unclear. Management may provide guidance
on these issues during the Q1 call in 4/05. We have assumed no Fluvirin sales in
2005 and $200MM in H2/06. For every 10MM doses, we estimate EPS may be
boosted by $0.10. CHIR shares are essentially in line at 30x our 2005 EPS and PEG
of 1.8 vs. biotech group average of 33x and 1.7, respectively. We estimate the
intrinsic value to be $31, which implies the pipeline value of $6, which is fair, in our
opinion. We expect shares to be range-bound in the near term. We maintain our
In-Line rating, estimates and Neutral coverage view. |
